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World Business

News/Business. (2011) Financial trouble in Greece; World Islamic Economic Forum; mobile phones in Kenya. (CC) (Stereo)

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Greece 7, Kenya 5, India 5, Greek 3, Davos 3, Middle East 2, Muslim 2, Central Asia 2, Europe 2, Astana 2, Standard & Poors 1, Islamic Conference 1, Bangalore Adventure Race 1, Indians 1, Mary Vassilaki 1, Nick Demos 1, Raya Abirached 1, Frau Merkel 1, Muslims 1, Muslim World 1,
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  WHUT    World Business    News/Business.  (2011) Financial trouble in Greece; World  
   Islamic Economic Forum; mobile phones in Kenya. (CC) (Stereo)  

    July 19, 2011
    6:00 - 6:30pm EDT  

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>>reporter: this week on world business... >>mired in debt, economically stagnant and threatening the stability of the entire eurozone; we lookat the makings of a modern greek tragedy >>which government in the world can pay 16% gdp, just to service their debt? >>reporter: in the wake of the arab spring we ask delegates at the world islamic economic forum about the need for transparent and open leadership. >>good governance is
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at the heart, at the core of ensuring that there is fair and just distribution of wealth. >>reporter: plus how mobile phones and solar power are helping children get an education in kenya >>we believe if we do lighting in schools, students will have access to more hours of learning. >>reporter: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. the word economy has its origins in the ancient greek "ekonomos", meaning "one who manages a household" yet modern greece is seen as the complete opposite, a country whose financial house is far from in order,
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a situation that has far reaching implications. >>reporter: nick demos and mary vassilaki are at home helping their children with homework. both parents have seen their salaries slashed by 30 percent over the past 2 years. it's had a huge impact ontheir standard of living and, they feel, their children's future. >>i am telling them that my salary has been decreased twice this year. i am anxious about their extra classes, their sports activities which they love. but i am not sure that they can go on with those." >>reporter: it's not just this family feeling the pinch - the entire greek economy has been contracting for 2 years, and will fall by a further 3.5 percent this year. overall unemployment is 16 percent - 42 percent for the young. >>reporter: many greeks blame poor government and the situation has prompted fury on the streets of athens... >>there should be 300 gallows
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build outside the parliament and we should hang all of them and their families because of treachery. they just steal and rob. they governed this country with lies and frauds. they deserve nothing else than the gallows." >>reporter: corruption and tax evasion are widespread, with as much as 30 percent of gdp undeclared.on average every greek paid 1,800 dollars in bribes last year. >>one in ten households that have experience of bribery, either given or been offered to take corruption, so therefore it is quite high. and if you consider also the fact that we have an extensive taxevasion...the combination of these two is quite extensive and it is a serious problem
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for the greeksociety." >>reporter: the government is desperate to get its house in order. it plans to raise 14 billion euros in tax over the next 5 years, but this is likely to depress the economy even further. it has also announced even more unpopular spending cuts... >>it's gone through a period of what's called reform fatigue. the average, individual greek has lived through the pain of the initial austerity measures, is then told that there must be further reformand more austerity. >>reporter: the austerity measures already imposed on greece have seen its economy stagger and it has a herculean task ahead. debt is set to hit 157 percent of gdp by the end of this year. >>even if they brought the deficit down to zero, even if they no longer have to borrow any money, they would still have to carry those 160 percent. now make a simple arithmetic... give an example; let's say they get money reasonably cheap at 10 percent...which government
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in the world can pay 16 percent of gdp just to service the debt? >>reporter: and what government in the world would buy that debt. ratings agencies, already assuminggreece will default, have seriously downgraded the country. standard & poors has given greek debt a ccc ('triple c') rating, the lowest in the world, even lowerthan 'junk' status. >>the greek government's two-year borrowing cost has climbed relentlessly in the past 8 months. it would now have to pay over 26 percent interest a year, so borrowing from the market is no longer an option. >>i think we have an issue of time. we have been pressed by those who fund us and by the markets ontime and that makes it difficult, first of all, to have the proper processes in place and poses thedangers of having valuations which are not attractive. >>reporter: meanwhile plans to sell 72 billion dollars
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worth of state assets have met with a mixed reception. >>selling just at the moment, the greeks will be selling their assets at knock-down prices. so it's probably the worst time for the greeks to be selling their assets. >>personally i would support even more privatization than that being announced, precisely because ofthe difficulties of reigniting growth in a context of increasing taxation. so privatization and other structural reforms can lay the basis for an economic recovery." >>reporter: recovery that looks increasingly unlikely. now, one year after receiving the biggest bailout in western history - 110 billion euros in emergency loans. a second, even larger bailout is being proposed. >>taxpayers in other parts of europe are beginning to lose patience with greece. >>i think if you do have a community, if one member is doing badly, you should help them. but they'll have to want to be helped and show some goodwill, too.
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>>i think, firstly, the greeks should tidy up their administration a little and of course work longer. because i think that if they don't work as long as the germans, why should the germans pay for it?" >>reporter: the real fear if greece founders is for the stability of the euro, but it is in everyone's interest to keep the euro afloat, especially for germany... >>nobody has profited more from the euro, the common currency, than the germans have...and i think between the fear of contagion and the fear of the ultimate breakup of the euro...so that's a pretty powerful list of reasons why the germans or frau merkel in the end ends up paying." >>reporter: if greece defaults or leaves the euro, it could set off an investor panic, with traders selling not just the bonds of countries struggling with debt - like portugal, ireland, spain and italy - but also unloading assets in america and emerging
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markets. this is the contagion most european leaders worry about. >>so while a default is likely and leaving the euro logical for greece, neither option is in anyone's interest. >>it would simply create an uncontrollable crisis. >>reporter: this will be a critical year for greece. if it can put the necessary reforms in place, and the european leaders hold their nerve, a wider common currency across europe could survive this test. >>if not, the european dream of a single currency could be blown apart. >>reporter: 2500 delegates from 42 different countries arrived at the kazakh capital astana recentlyfor the 7th world islamic economic forum. the meeting was held at a time of real political and economic change in the muslim world in the wake of the arab spring. one topic high on the agenda with delegates was how the uprisings will play out and why the governments that replace the old regimes must embrace the principles of good
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governance. >>reporter: every winter thousands of the world's business, political and media elite gather in the swiss town of davos to discuss the world. the world economic forum is a huge meeting, but one biasedtowards the stagnant economies of the west. >>every summer thousands a different set of elite gather from the muslim world for what is already being called the islamic version of davos: the world islamic economic forum. >>unlike davos, this meeting changes location each year and this summer for the first time was held in central asia this summer; in astana, the capital of kazakhstan, current chair of the organisationon the islamic conference and an economy of growing global importance. >>today we witness a seismic shift in the demographics
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of global economics. a resurrection not only of increased trade connection between different regions such as southeast asia, the middle east, africa and central asia, but a coming together of its peoples and with it a greater understanding of cultures and various traditions. >>reporter: aside from the usual round of discussion on the halal industry and islamic banking, there was a sense delegates wanted to tackle deeper issues in the muslim world, most notably its underperformance economically, along with unemployment and poverty, highlighted in a keynote address at theforum. >>gdp growth for muslim countries as a whole was only
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2.1% in 2009 - a relatively low growth rate that is further compounded by unequal development and inequitable distribution of wealth and income within the muslim countries themselves. >>reporter: the muslim world accounts for a fifth of the world's population yet generates only 7 percent of gdp. frustration at this poverty, along with the arab spring, were key issues at the world islamic economic forum meetings. >>the beginning of the 21st century's second decade turns out to be a time of great challenges for the ummah. the global financial crisis, dependency on food imports, youth unemployment and a wide range of other problems have caused unprecedented upheavals in a number of countries in north africa and the middle
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east. >>reporter: the arab spring may be a signifier that the muslim world is changing, but in many countries the underlying conditions remain the same. >>there is a problem in the region of arab countries; a problem of governance, of lack of governance, and with relts of employment, the problem is employment. the answer is to creat the maximum opportunity of jobs. >>reporter: opportunity for jobs, but not necessarily jobs themselves. >>i think there's plenty of large developments in many of these countries but it's top down as opposed to bottom up. and i think that's a reflection of the fact that you need bottom up democracy and also bottom up investment. >>reporter: in any established economy the lion's share of jobs are created by small businesses, creating wealth and stability, but also a vital sense of ownership. >>i think when a person has his own business he is
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interested, because it belongs to him. we are allpeople, we love freedom and when an individual has his own business he is freer. >>reporter: but such freedom can only flower in the right conditions, which must be created by equitable, honest and transparent governments >>good governance is at the heart, at the core of ensuring that there is fair and just distribution of wealth in the muslim countries....in the world for that matter. and so it's important for us to remember that governments that are not governed on the basis on good governance are living on borrowed time. >>reporter: the islamic world is growing at twice the rate of the non-muslim world and within 20 years may account for up to a quarter of the global population. this represents a strong demographic advantage if the right environment exists to tap it.
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>>a key issue it still faces however and one recognised at the forum, is a negative western perception. >>the demonization of islam....i think the media has a important role to play here. there's some really good examples within the muslim community, the global muslim community which need to be showcased. >>reporter: examples like the moderate muslim democracies of indonesia, turkey and malaysia; stable,successful and rapidly approaching developed status, without abandoning the central principles of their faith, especially tolerance and moderation. >>i think concept of global movement of the moderates as a key value is cardinal to ensuring that countries in the muslim world will develop on the basis of social justice. >>historically islam has been about the middle way, about moderation. and this is not a new phenomenon; this is
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something that's rooted in islamic tradition. >>to us islam means something constructive and muslims means the ones who are prepared to contributeto the overall positive development. and if you don't agree, you want to raise political issues, orreligious issues, please go somewhere else. >>reporter: while this year's world islamic economic forum may not have resolved the world's issues,as the forum came to a close, across the city at the central mosque a steady stream of faithful came to pray; demonstrating perhaps the real face of nearly all of modern islam; moderate, peaceful andrespectful. >>reporter: still to come on world business... >>why solar panels, phone charging and lighting are helping make a brighter future for kenyan schoolchildren. >>and how adventure sports are making splash in india. >>extreme india... and the rest in just a moment
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on world business... >>reporter: around 85% of people in the world now pay to use a mobile phone, and in countries like kenya, where politics & geography can be a serious impediment to the roll out of fixed line internet connections, the mobile phone is playing an increasingly vital role. >>kenya is now a country connected. >>an astounding 99% of the internet traffic in kenya is done through mobile operators. >>there are 22 million mobile subscribers and although only 15% have mobile internet, even the humble text message is having a dramatic effect.
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>>if i want to maybe get the raw materials or maybe manure i can order them via my phone and i'll get them supplied. i can also pay whatever i have purchased, if it is the fertilisers, or the pesticides all of them. >>reporter: 31 million kenyans have no bank account, so the ability to buy and sell goods in even the most remote areas through person-to-person sms money transfers has made a huge difference to theirlives. >>and it's something even providers didn't anticipate. >>when mpesa was first launched in safaricom it was going to be positioned as a value-added service so it was never really supposed to obtain any major revenues or, you know, even contribute to the bottom line but the way it's grown it's now become
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quite an important factor. >>reporter: so far over 13.5 million kenyans have signed up $5.5 billion us dollars moving through the system. >>through this service, the mpesa you get to see that people are able to trade, parents are even able to send children their school fees using mpesa and we get to see that it has bought a rapid and random change. >>reporter: in some rural areas where drought is a constant problem, mobile money operated solar powered pumps are even delivering fresh water to local people who otherwise would have to walk half a day to the river. >>the project, which we have implemented here in katitika in kitui is providing water to approximately 2000 people whose benefiting from this solar system by paying three shilling per 20 litre
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of water. they are paying for the service and the maintenance of the system and thereby contributing to thelong-term sustainability of the water projects. >>reporter: of course charging phones takes electricity, and on the wide arid plains that in itself can be a challenge. >>british charity 'solar aid' helps solve this problem with photovoltaic panels, but they also have other life changing benefits... >>here at kilisa primary school in kitui west. the panels provide power for phones, but also light for study - helping children out of poverty... >>we do solar installations in schools and health centres because we believe if we give a light, if we do lighting in schools, students will have access to more hours
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of learning and it's only througheducated people that we can fight poverty. >>reporter: it's especially important for kenya where half the population is under 25. >>the charity pays for 90% of the installation; the rest is covered by the community. this ownership is vital as it means villagers have to raise capital to pay back the debt, which later provides funds for upkeep and maintenance. >>here at the killisa school in kutui west they help pay for the solar installation by providing hair shaping services for 10 shillings a head and round the other side of the building they charge mobile phones. >>reporter: there is a more fundamental problem being tackled here too. a little further along the road this school is able to offer boarding facilities
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to its students because of the solar installation. >>this qualifies it for the government's 'food for school's' programme which pays funds only to schools with resident pupils. now, better fed and able to study at night, the students' results speak for themselves. >>the school started 10 years ago and we have never had a case of a pupil joining a national school,but as a result of the installation, now the parents, the pupils and the teachers are rejoicing fornow we have taken to a national school. >>schools are recording better grades than before, students and people from this area are going to high schools that are of national level standard, provincial level standard, which was a difficult thing before, because for a student to work hard and get a good grade to move to a better school from this region. it
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was very, very difficult. >>reporter: which will hopefully make this generation more competitive as well as connected. >>reporter: india has never been a nation known for its love of extreme sports, but that could be about to change. as its economy booms, the country is embracing adventure travel. this growing interest is thanks to rising incomes, the sports featuring in bollywood films and on tv, returnees from the west, and a new corporate culture spawned by the outsourcing business. >>i was scared of water before, basically i cannot swim. so now with this lifejacket and all, i can swim in water. >>got a couple of cuts around my fingers. it's good.
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>>people like us, who are always sitting on the bench and doing computer work - sitting in front of the computer for hours not doing any exercises - these kind of sports actually help us to exercise abit. >>reporter: adventure sports in india are on a roll. an increasing number of weekend warriors e taking up sports like white-water rafting, rock climbing, and biking. >>we have a young population that going start earning money and going to start getting in the workforce and getting jobs and so on. previously it used to be trekking and now it will become mountain climbing. so it will grow, it will certainly become something that everyone will want to do. >>reporter: this is beginning to translate into a big business opportunity, with adventure sports companies mushrooming across the country. 220 kilometres north of new delhi is
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rishikesh; a popular spot for an adrenaline soaked spot of white water rafting. >>you are just 4-5 hours away from delhi, so close to it, but still you feel you are so away from it. it's another world >>many local people have joined this industry. the rafts have become cheaper, and the government offers many subsidies and cheap loans. that's why the prices we charge customers have fallen too. >>reporter: hardcore enthusiasts are adding and promoting new competitive events every year. at the bangalore adventure race, competitors combined cycling with rock climbing to push the limits of endurance. >>we're about 5 hours into the race, and we're at the bouldering area. and this is one of the most difficult part of the race today. the participants have already cycled 50 kilometres,
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and 12 kilometres of very, very technical trail. they're cramping, and they can't lift their legs, and their arms are tired. >>this is my first adventure race. i've always been interested in adventure outings, treks and rock climbing; i haven't had much opportunity to do that. this is my first hard core race >>reporter: and it's not just enthusiasts. corporates too have embraced outward bound-style leadership programs to build confidence and team spirit. this is particularly popular among indian outsourcing firms. >>it's combined with an adventure holiday. so a group of say 20 to 50 people coming from a company but some kind of agenda behind them; be it motivational related issues or team building as their coreissue that they wish to target or leadership skills for instance. >>obviously it's a team-building activity, the ones who were shy, not interacting with others, came
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out good. we've grown as an individual and as a team. >>reporter: with seven major mountain ranges, including the majestic himalayas, half a dozen mighty rivers and thousands of acres of jungle, india certainly has the terrain for challenging outdoor activities. and as income levels continue to rise, more and more indians will try to push their own limits. >>reporter: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.
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